Exhibit 99.1
Healthaxis Announces Second Quarter 2004 Financial Results;
Revenues and Earnings Down for the Quarter as Company Completes its
Repositioning and Financial Restructuring
IRVING, Texas--(BUSINESS WIRE)--Aug. 10, 2004--Healthaxis Inc.
(Nasdaq:HAXS), a technology-enhanced provider of business process
solutions and services, including claims and benefit administration
applications, web-enabled software solutions and outsourced claims
related services for health benefit administrators and health
insurance claims processors, reported financial results today for the
three and the six months ended June 30, 2004.
Second Quarter 2004 and Six Months Highlights(a)
-- Revenues for the quarter were $3.9 million compared to $5.5
million for the same quarter of 2003. Year-to-date revenues
were $8.1 million compared to $10.7 million in 2003. The
decline in revenues is attributable to several factors, the
most significant of which was the conclusion of work on the
Company's contract with the State of Washington, which
accounted for $576,000 of the quarterly decline and $946,000
of the year-to-date decline. Recurring per employee per month
(PEPM) revenues declined principally as a result of a customer
completing a multi-year run-off from Healthaxis systems, begun
in 2000. Transaction fees, professional service fees and print
fees also were down due to a decrease in the number of covered
lives in certain on-going customers.
-- Second quarter GAAP operating expenses were down 11 percent,
to $5.7 million from $6.4 million in the same quarter last
year. Operating expenses year-to-date also were down 11
percent, to $11.6 million from $13.0 million in 2003.
Approximately $785,000 of the year-to-date decline was related
to termination of contract labor on the State of Washington
contract and an additional $352,000 was related to lower
amortization and depreciation expense. The remaining expense
reduction was due primarily to lower costs for salary,
benefits, travel and other personnel related expenses.
-- The decrease in operating expenses in 2004 was realized in
spite of our increased investment in sales and marketing and
significant costs incurred in the preferred stock modification
transaction. Legal, accounting and printing expenses, in
addition to the cost of a third-party fairness opinion,
resulted in an additional $373,000 of operating costs
year-to-date, $341,000 of which was incurred in the second
quarter.
-- The operating loss was $1.8 million for the quarter compared
to $936,000 in 2003 and $3.5 million year-to-date, compared to
$2.3 million for the first six months of last year.
-- EBITDA (defined as revenue less cash operating expenses) was a
loss of $1.2 million for the second quarter, compared to an
EBITDA loss of $69,000 for the same quarter of 2003. The
year-to-date EBITDA loss was $2.1 million, compared to
$506,000 in 2003, reflecting the decrease in revenues from
2003 to 2004 exceeding the Company's reduction of cash
operating expenses. The attached financial table provides a
reconciliation of EBITDA to the GAAP operating loss.
-- The net loss attributable to common shareholders for the
second quarter was $1.5 million, or $0.54 per share, bringing
the year-to-date loss for the first six months to $3.3 million
or $1.19 per share. This compares to losses attributable to
common shareholders of $1.1 million, or $0.20 per share, and
$2.5 million, or $0.47 per share, for the same periods in
2003. The number of weighted average common shares outstanding
in 2004 is significantly less than the 2003 comparable periods
due to the Company's September 30, 2003 repurchase and
subsequent retirement of 48 percent of the outstanding common
stock previously held by UICI.
-- Cash at June 30, 2004 totaled $5.9 million, compared to $6.8
million at March 31, 2004 and $7.9 million at December 31,
2003. The major uses of cash for the first six months of 2004
have been $1.2 million used in operations, $354,000 used in
investing activities (such as software development, contract
start-up and purchases of property, plant and software) and
$524,000 from financing activities. The financing activities
consisted primarily of a $223,000 preferred stock dividend in
January (for the previous six-month accrual) and $303,000 debt
services on the note payable to UICI.
-- As previously announced, the Company modified the terms of its
outstanding preferred stock following a vote of common
shareholders at the Annual Meeting held June 30, 2004. Under
terms of the agreement with the preferred shareholders, the
preferred stock is convertible into an aggregate of 3.85
million shares of common stock. In addition, the preferred
shareholders received warrants for 1 million shares of common
stock at an exercise price of $5.50 per share. Additional
terms included the removal of liquidation and redemption
preferences and virtually all voting rights and dividends, as
well as the imposition of limited restrictions on the transfer
of the stock in both the private and public markets for a
period of one year after the effective date of the
transaction. The company's proxy statement, filed prior to the
June 30th meeting, included full details of the modification
transaction.
-- During the quarter, the Company also announced final
settlement of the State of Washington Health Care Authority
contract. Completion of this settlement represented the
Company's full exit from government contracts, as the Company
completed the transition of its business to claims related
business process solutions and services and ASP based systems
for commercial health benefit administrators and health
insurance claims processors.
-- The Company previously announced the contract extension of two
if its largest customers to 2009 and the commitment of one of
these customers to increase its covered employees on the
Healthaxis claims system by approximately 50 percent. In
addition, the Company recently announced the addition of a
large Blue Cross Blue Shield BPO services customer serving
more than 700,000 members. Healthaxis began servicing this
customer in the third quarter.
Commenting on the results for the second quarter and the first six
months of 2004, James McLane, the Company's chairman and Chief
Executive Officer, said: "Healthaxis has endured a long period in
which we had to redefine the business strategy and streamline the
Company's operations, while at the same time completing a series of
transactions designed to simplify our capital structure. This process
has been longer and more difficult than anyone expected, but we have
emerged successfully as a smaller and better positioned company with a
very clear sense of our competitive strengths and our strategy, which
is directed toward surrounding and supporting the processing of a
health insurance claim. While the results for the quarter and six
months continue to show a loss from operations, our operating costs
and overheads are now in position to be leveraged effectively with
revenue growth. And, I am encouraged by the depth and breadth of our
sales pipeline growth created by our new, expanded and seasoned sales
team."
Continuing, McLane said: "We are focused on helping our existing
customers grow their covered lives, generating new customers through
direct sales and through strategic alliances with complementary
companies in the claims process services market, as well as exploring
strategic options which can add complementary scale, strong customer
relationships and profitable operations to our business."
(a) The financial results reported in this release contain both
measures of GAAP and Non-GAAP financial information, as defined in
Regulation G adopted by the Securities and Exchange Commission.
Accordingly, all such non-GAAP financial measures that are presented
are also set forth on the tables attached to this press release and
are both compared to, and reconciled with, the most directly
comparable financial measure calculated and presented in accordance
with GAAP. Management believes that these non-GAAP financial measures
are useful in monitoring basic cash flow generated and used in the
company's core operating activities, and in monitoring the effects of
changes made by management in the Company's operations across
different time periods. These non-GAAP factors alone are insufficient
to measure all of the company's operating characteristics and should
be used in conjunction with GAAP measures to evaluate total operating
performance.
Conference Call:
Healthaxis management will host a conference call on Wednesday,
August 11, 2004 to review results and answer questions. The conference
call will be held at 11:00 A.M. Central Time. Investors wishing to
participate should call 888-334-7880 and request the Healthaxis Second
Quarter Results Call. Please plan on calling in at least 10 minutes
prior to the scheduled start.
A replay will be available, beginning approximately 2 hours after
the live call is completed, until September 10, 2004 at 866-518-1010.
A Webcast of the live call and audio archive will also be
available through the company's Website www.healthaxis.com under the
heading "About Healthaxis" and "Investor Relations."
About Healthaxis Inc.
Healthaxis (Nasdaq:HAXS) is a leading technology enhanced provider
of fully integrated business process outsourcing and claims and
administration solutions and services for health benefit
administrators and health insurance claims processors. For information
on Healthaxis products and services, call (800) 519-0679 or visit
www.healthaxis.com. For investor information, call (972) 458-8000.
Forward-looking statements:
Statements that are not purely historical facts, including without
limitation statements about anticipated or expected future revenue and
performance, constitute forward-looking statements within the meaning
of Section 27A of the Securities and Exchange Act of 1934, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are subject to known and unknown
risks, uncertainties and other factors, which may cause actual results
to be materially different from those contemplated by the
forward-looking statements. Such factors include without limitation
the risks and uncertainties identified in our documents filed with, or
furnished to, the Securities and Exchange Commission, including those
identified under the caption "Business-Risk Factors" in our most
recently filed Form 10-K and under the caption "Proposal I - Approval
of Issuance of Common Stock and Related Securities Transactions
- -Factors affecting Current Common shareholders" in the Company's Proxy
Statement dated June 1, 2004. We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. Readers are cautioned
not to place undue reliance on forward-looking statements.
Healthaxis Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenues $3,894 $5,483 $8,143 $10,714
Expenses:
Cost of revenues 4,024 4,975 8,377 10,072
Sales and marketing 341 283 634 538
General and
administrative 1,106 837 2,074 1,746
Research and development -- -- -- 30
Amortization of
Intangibles 252 324 528 648
---------- ---------- ---------- ----------
Total operating expenses 5,723 6,419 11,613 13,034
---------- ---------- ---------- ----------
Operating loss (1,829) (936) (3,470) (2,320)
Interest and other income
(expense), net (48) 3 (85) 14
---------- ---------- ---------- ----------
Net loss (1,877) (933) (3,555) (2,306)
Preferred stock
contributions (dividend) 371 (117) 261 (232)
---------- ---------- ---------- ----------
Net loss attributable to
common shareholders $(1,506) $(1,050) $(3,294) $(2,538)
========== ========== ========== ==========
Net loss per share of
common stock (basic and
diluted) $(0.54) $(0.20) $(1.19) $(0.47)
========== ========== ========== ==========
Weighted average common
shares used in computing
loss per share
Basic and diluted 2,768,291 5,361,222 2,768,061 5,362,885
GAAP / Non-GAAP Comparison Three Months Ended Six Months Ended
and Reconciliation
June 30, June 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenues $3,894 $5,483 $8,143 $10,714
Cash expenses:
Cost of revenues 3,647 4,456 7,588 8,964
Sales and marketing 336 276 622 523
General and
administrative 1,095 820 2,051 1,711
Research and development -- -- -- 22
---------- ---------- ---------- ----------
Cash operating expenses 5,078 5,552 10,261 11,220
---------- ---------- ---------- ----------
Non-cash operating
expenses:
Operating depreciation &
amortization 385 534 806 1,148
Stock based compensation 8 9 18 18
Amortization of
acquisition intangibles 252 324 528 648
---------- ---------- ---------- ----------
Total GAAP operating
expenses 5,723 6,419 11,613 13,034
---------- ---------- ---------- ----------
EBITDA (Revenues less cash
operating expenses) (1,184) (69) (2,118) (506)
---------- ---------- ---------- ----------
GAAP operating loss
(EBITDA less non-cash
operating expenses) (1,829) (936) (3,470) (2,320)
Interest and other income
(expense), net (48) 3 (85) 14
---------- ---------- ---------- ----------
Net loss $(1,877) $(933) $(3,555) $(2,306)
========== ========== ========== ==========
Healthaxis Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data) (Unaudited)
June 30, Dec. 31,
2004 2003
--------------- --------------
Assets
Cash and cash equivalents $5,856 $7,887
Accounts receivable, net 2,153 3,077
Other current assets 818 729
--------------- --------------
8,827 11,693
Property & Equipment, net 1,072 1,238
Goodwill 11,276 11,276
Other assets 2,152 2,907
--------------- --------------
Total assets $23,327 $27,114
=============== ==============
Liabilities and stockholders' equity
Current liabilities $3,371 $3,263
Long-term debt 2,376 2,697
Other long-term liabilities 2,368 2,407
Stockholders' equity 15,212 18,747
--------------- --------------
Total liabilities and stockholders'
equity $23,327 $27,114
=============== ==============
CONTACT: Halliburton Investor Relations
Matt Kreps, 972-458-8000
mkreps@halliburtonir.com